After opening higher, the rupee shed 3 paise to 65.29 against the US dollar in early trade on Friday despite better-than-expected inflation numbers released on Thursday.
Reflecting improvement in the economic situation, industrial production grew by 7.1 per cent in February, while key retail inflation slipped to a five-month low of 4.28 per cent in March, official data showed on Thursday.
The uptick in industrial production has been driven largely by the robust performance of the manufacturing sector coupled with higher offtake of capital goods and consumer durables.
Retail inflation based on the Consumer Prime Index (CPI) moderated in March due to easing food prices, including vegetables.
On Thursday, the rupee staged an impressive recovery from its five-month low towards the fag-end and closed higher by 5 paise to close at 65.26 against the US dollar.
Meanwhile, the benchmark BSE Sensex rose 134.96 points, or 0.39 per cent, to 34,236.09 in early trade on Friday.